So Not a Surprise

The New Economics Foundation has done a study on the economic impact of bankers, and claims to have shown that bankers actually destroy economic value:

Bankers should count themselves lucky they are being hit by a mere 50 per cent additional tax on bonuses, a new report argues today, because their benefit to society is negative.

The New Economics Foundation, a left-leaning think-tank, says that by contrast hospital cleaners and many other low-paid workers contribute far more to society and this should be reflected in their pay.

Although the NEF is far from an orthodox economic think-tank, its A Bit Rich report stems from standard public economics theory that the government should step in if people's value to society is remarkably different from their private value to an employer. The government already steps in, taxing everyone to ensure many jobs with high social value happen where those services would not be provided otherwise.

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The authors assume the financial crisis and recession would not have happened without City bankers engaging in risky, opaque and complex transactions. Applying a guess about the cost of the recession on the rest of society, they estimate top City bankers destroy £7 of value for every £1 they are paid privately.

If the figures are accurate, a rational government should shut the City. Naturally, the City disagrees and so does the Treasury, which sees benefits in properly regulated activity in the Square Mile.

This is something that ordinary people get, which is why the AIG bonuses and their ilk so outraged them: The point is not that these people are uniquely skilled, the Alex Rodriguez's of their craft, but rather that they are the "Marvelous" Marv Throneberry's of the world.

These people do not need to be retained, they need to be excised from the financial system.